FTX Founder Sam Bankman-Fried Indicted on Criminal Fraud and Security Charges

December 13, 2022

We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.

U.S. Securities and Exchange Commission Chair, Gary Gensler, on a civil lawsuit filed by the SEC on Tuesday. FTX founder Sam Bankman-Fried was arrested on Monday in the Bahamas after the U.S. filed separate criminal charges.

Background: FTX – a cryptocurrency exchange company – was founded by Sam Bankman-Fried in 2019, and it quickly grew as a company. However, FTX filed for bankruptcy in November when they could not complete customers’ withdrawal requests. Bankman-Fried was arrested on Monday in the Bahamas, where FTX was based. His arrest occurred less than 24 hours before he was scheduled to testify (remotely) in a U.S. House Financial Services Committee hearing.

The Lawsuit: On Tuesday, the SEC filed a civil lawsuit on the grounds that Bankman-Fried diverted customer funds in order to support his hedge fund, Alameda Research, since FTX’s founding, “and to make venture investments, real-estate purchases and political donations (The Wall Street Journal). These moves were allegedly concealed from investors.

This lawsuit will likely only proceed after Bankman-Fried faces the criminal charges that the U.S. filed against him on Monday before his arrest; these charges include conspiracy to commit wire fraud on customers and lenders, wire fraud on customers and lenders, and conspiracy to commit money laundering.

Sam Bankman-Fried arrested in Bahamas on U.S. request (The Washington Post)

Sam Bankman-Fried Led Yearslong Fraud at Company, SEC Says (The Wall Street Journal)

by Jenna Lee,